For many young people, the concept of planning for the future and saving money may not be a priority.
But it is important that you start taking care of your finances from as early as possible if you want to achieve the many goals you have.
Budgeting and saving will not only keep you on track with your spending, but teach you a lot about financial discipline.
Here are offers seven tips to help young people reach their financial goals.
1. Save your money before you spend it
Motlatsi Mkalala, head of main markets at Standard Bank said that before you spend any money you receive, whether it’s your allowance, income from your job, or a gift, put a portion of it aside.
This will prevent you from spending all you have, including that which is meant for your savings.
2. Know which account type to open
According to Mkalala, opening an interest-bearing savings or cheque account will keep you motivated to save.
It will also give you an out-of-sight place to put your savings and show you what interest can do to your bank balance.
3. Speak to your parents about matching your savings
If you are under 18 or still studying, it may be a good idea to ask your parents to match any savings that you make, or even half of it. This will obviously be more achievable within middle-class or affluent households.
4. Have a set of goals
Setting goals will make the process of saving much easier because you will know what you are saving your money for. It will also prevent you from being tempted to spend your money unnecessarily.
Charnel Collins, CEO at National Debt Advisors (NDA) said that young people can set their financial goals by identifying what they want to achieve financially.
5. Track your spending
Therése Havenga, head of business transformation at Momentum Investo said that the first step to tracking your spending is to make a list of all the expenses you actually need and expenses you can do without.
Havenga suggests that young people start taking a closer look at their bank statements.
“By paying careful attention to all of their expenses so they know where they overspend and where to make changes in their spending habits,” Havenga said.
6. Give yourself an allowance
“If you have a side hustle or part-time job, pay all of the earnings straight into the account you have elected to use for saving,” Mkalala said.
Doing this will stop you from being tempted to spend your money and, instead, cultivate financial discipline.
7. Delay your gratification
Delayed gratification is a person’s ability to resist an instant reward so that they can get a more valuable reward in the future.
You can teach yourself delayed gratification by making a list of your financial priorities over the next one to three years. Next, create a plan to save enough money to take care of each of them.
Mkalala says that starting the journey of saving at a young age will empower you in the short term and bring you many long-term benefits.
“Don’t be deterred if you are only saving a small amount to begin with; the magic of compound interest means that when you start early, even modest amounts grow into large sums.”
IOL Business